A Car Feebate Program and Its Effects Evaluation
Abstract. A car feebate program is one of governmental policies to improve our environment. It is designed to impose a fee on high-carbon vehicles and give a rebate to low-carbon vehicles, so that it aims to shift consumer purchases to low-carbon vehicles. Starting from 2015, Korean government will plan to implement this policy for this purpose. To evaluate the effectiveness of this policy, this paper conducts research from three different aspects: its effects on Korean auto industry, fiscal neutrality, and consumer welfare. Based on the evaluation, this paper concludes whether it is timely or premature that a car feebate program is introduced in Korea as planned.

1. Introduction
Due to a fee imposed on high-carbon vehicles and a rebate given to low-carbon vehicles, the relative price adjustment arises among vehicles: the price of high-carbon vehicles relatively goes up, whereas that of low-carbon vehicles relatively goes down. This paper asks how this relative price adjustment affects Korean auto industry. Moreover, given the fact that this policy pursues “fiscal neutrality”, which means the amount of fees imposed equals to that of rebates given, this paper doubts whether or not it could secure the fiscal neutrality. Lastly, this paper shows how this policy influences on consumer welfare.
As global warming has been getting worse due to vehicle exhaust emissions, many countries are introducing environment-protecting policies. A car feebate program is one of them. It is reported that Korean government will plan to introduce this policy in 2015. However, there is constant conflict over this policy between the government and the auto industry. In that a new policy can secure its justification only when it contributes to promoting the entire social welfare, these questions above are important and we need to pay